Oil inches higher but struggles to break through $61 a Barrel

Hedge funds increased bullish bets in the week ended 17 December 2019 to the highest level in more than seven months amid optimism over for a US-China trade truce.

Bloomberg/Simon Dawson

Oil edged higher in light trading, but the rally was limited on news that Kuwait aimed to reach a deal with Saudi Arabia that will restore crude output along their border, and as US shale drillers boosted drilling, reported Bloomberg.

However, gains were capped as investors weighed news the Kuwait-Saudi shared neutral zone, which has been shut for at least four years due to disputes between the two countries, can produce as much as 500,000 barrels a day.

Oil is having one of its best months of the year on US-China trade optimism and after an agreement to deepen output cuts by the Organisation of Petroleum Exporting Countries and its allies also provided a boost.

Khaled Al-Fadhel, Kuwaiti Oil Minister said that Kuwait and Saudi Arabia could reach an agreement on the neutral zone by the end of this year. An actual resumption of output at the zone’s Wafra and Khafji oil fields would depend on a political decision.

The area is not expected to add oil to global markets because both nations adhere to OPEC supply limits.

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